If the licensee landscape in 2018 was characterised by the rise of the ‘second tier’, this year’s Professional Planner Licensee List will be marked by the death-throes of institutional wealth management and the surge of limited license providers.
The banks have not only lost more ground, they’ve all either broken up or are in the process of doing so. As the banks’ advice strategies splinter, the fastest growing newcomers surge and face new levels of scrutiny from the market and the regulator.
For the institutions, the fallout from the Hayne royal commission continues, and it’s either a steep descent or a pause as they figure out the best way to exit the market. For the rest, including a growing cohort of SMSF-only advisers, it’s time to grow.
The largest licensee owner in the country remains AMP with 2412 advisers registered on ASIC’s Financial Adviser Register, 143 less than in 2018. AMP’s new leadership and a new head of wealth face an uphill battle to build the wealth behemoth’s reputation. Its restrictive buyer-of-last resort agreements are slowing the adviser outflow, but the trend is clear considering the company lost 216 advisers the year before. AMP is shrinking. Unlike the banks, however, AMP remains resolute and has so far avoided announcing an exit from wealth.
Far from shrinking, IOOF has enacted the transfer of 700 ANZ advisers into its ranks and risen from the sixth largest licensee last year with 944 advisers to second in 2019 with 1802. Retaining these advisers will be key to IOOF rebuilding its brand after a poor showing at the royal commission and APRA’s disqualification of its director and chair.
The third and fourth largest licensee owners in the country, National Australia Bank and Commonwealth Bank, are in a holding pattern while their exits are mapped out.
NAB confirmed in February that the divestment of its MLC Wealth brand is on hiatus until at least July, in order to wait out the “challenging” current regulatory and operating environment. One month later, CBA also announced that the divestment of its bundled ‘Newco’ business, including 700 advisers in licensees Count Financial and Financial Wisdom, would be delayed while the bank prioritised remediating clients and implementing recommendations stemming from the royal commission.
Neither bank has lost a significant number of advisers as yet – NAB has actually grown slightly, due to an increase in numbers at its high-end JBWere licensee, which it intends to retain. When the splits are enacted, however, the banks will slide down from spots three and four, respectively, to around seven and eight.
The licensee owners supplanting their place will likely be the current number five and six on the list, the National Tax & Accountants’ Association and Easton Investments. Both groups are surging via a similar model; limited licensing arrangements for accountants who tack SMSF advice onto traditional accounting services. NTAA’s sole licensee, the SMSF Advisers Network, had 33 advisers in 2016 and 831 last year. Today, SMSF Advisers Network (SAN) has north of 1000, but its rapid ascent has brought with it the attention of ASIC, which imposed restrictions on the group after it found SAN “failed to demonstrate compliance with the best interest duty and related obligations”.
Easton Investments’ numbers have swollen with the transfer of 343 advisers from GPS Wealth and the subsequent purchase of The SMSF Expert in late 2018. Like SAN, Easton mostly provides limited licenses for accountants giving SMSF-only advice.
The weight applied to the numbers of the surging accounting-cum-financial advice networks is a point of debate, however, given the majority of the advisers – or all of them in the case of the SMSF Advisers Network – don’t offer a full suite of advice services. GPS Wealth chief Graeme Evans acknowledges this, saying: “People get excited about our numbers, but a lot of them are operating under a limited license.”
Moving further down the list, Westpac falls from number five to number seven after it entered a sale agreement with little known licensee Viridian Advisory for its aligned Securitor and Magnitude dealer groups. Advisers have until September 30 to exit the dealer groups, with a ‘referral agreement’ in place for them to join Viridian.
According to Viridian chief executive Glenn Calder, there’s no pressure. “I certainly don’t think everyone will come across,” he tells Professional Planner. “We’re not convincing people to do something they don’t want to do.”
Also quite high on the licensee list this year is Brisbane-based stockbrokers Morgans at number eight, which added another close to 50 advisers during the period, and Synchron at number nine, which is the only majority privately-owned licensee in the top ten list after the closure of Terry McMaster’s Dover. Synchron has evolved from an insurance-heavy licensee to become a major provider of holistic planning services with 494 advisers, up 34 from last year.
ANZ’s movement on the list from fourth largest owner with over 1000 advisers across five dealer groups last year to be ranked 10th in 2019, with 385 advisers after the IOOF split, is noteworthy. ANZ remains the only bank to fully realise its wealth exit ambitions so far.